Athletic Greens and the battle of the powdered nutrition brands
Has the market for meal-replacing nutrition products reached a tipping point that could spur widespread adoption? These brands believe so.
You probably know Athletic Greens. Maybe you read about a bunch of celebrities investing in the brand. Perhaps you heard that it’s just become a unicorn company, valued at $1.2 billion. You’ve also may have had its advertisements stalking you around social media, recommended by influencers and popping up in paid-for posts.
Founded in 2010, until very recently the brand had been quietly minding its own business. Bootstrapped from the start, in the past eight months it has raised over $115 million in funding as investors have jumped on to the fact that something has shifted in the way people want to feed themselves.
Athletic Greens sells just one product — its AG1 daily nutrition supplement, which costs $99 for 30 servings (or a bit less if you’re willing to commit to a monthly subscription). The brand says its mossy green powder contains 75 minerals, vitamins and nutrients in each serving, at just 50 calories a shake.
“Very few of us have the perfect diet, with all the nutrients that we need to support even a moderately stressful lifestyle,” says Kat Cole, Athletic Green’s president and chief operating officer, pointing out that shaking up a scoop of AG1 in water requires far less thought that designing a nutritionally complete meal plan. It wasn’t so long ago that people were making fun of Soylent for suggesting we could replace our meals with powders. But now, Cole says, these products are “moving from a niche audience of biohackers and athletes … and are on the journey of mainstream adoption.”
But why would anyone give up the experience of eating real foods — one of life’s great pleasures — in favor of a functional slurry?
It’s a question that’s been asked time and time again as powdered nutrition and meal replacement brands have launched on the market. Soylent has been described as “everything that’s wrong with modern life” by U.K. newspaper the Guardian, while a Wired writer branded Huel a “cold, very liquid porridge” that he “couldn’t finish” without mixing it with other foods.
But despite critiques, these products have continued to win people over. In June, Soylent announced that its business was now profitable, while Huel says it’s thinking about listing on the London Stock Exchange this year. Kencko, which launched in 2018 selling powdered smoothies, has just raised $10 million. In 2020, German meal replacement brand Yfood raised €15 million ($17 million) to roll its products out across Europe.
The problem these brands are responding to can be summed up simply: “Eating healthily is quite expensive and inconvenient,” says Darren O’Reilly, the founder of Whole Supp, a meal replacement brand that launched in January. At a time when middle class discourse has honed in on concepts such as millennial burnout, late-stage capitalism and productivity dysmorphia, it makes sense that meal replacements — and their promise to ease daily life just that little bit — could finally start to convince the masses. By 2025, the market is estimated to hit $25 billion.
People are using meal replacements to fix the bits of their diet they struggle with, using them as “a lifestyle supplement, rather than replacing all meals,” says O’Reilly, who adds that he uses his own product to replace two meals per day. “I’d always skip breakfast. I was working long hours, grabbing a meal deal at lunchtime, trying to squeeze in the gym. And when I started looking at trying to eat healthier, it was this minefield.”
“Two or three years ago my friends were very reluctant to try Soylent or Huel or anything else that looks like that,” adds Tomás Froes, the cofounder of Kencko. “Today they’re more open to it, and more willing to try things that are not necessarily in the form factor they’re used to, but supposedly healthier.”
That promise of improved health is a tricky one to measure — as with all supplements and superfood blends, consumers are required to take a leap of faith.
The brands’ websites contain plenty of information about the benefits of certain ingredients (often providing links to scientific studies) and make mention of their rigorous processes for sourcing ingredients and manufacturing their powders. But the improvements that people actually feel when using these products are self-reported, which could be influenced by any number of factors beyond the product itself. A great night’s sleep, a personal affection for the brand and its purported benefits — or even the guilt over spending so much money on a powder instead of some actual food — can be seen by a user as proof that things are working.
“It’s a crowded space and unfortunately not a very regulated space,” says O’Reilly, who anticipates that customers are likely to get more picky about what these powders actually contain as they become more acquainted with the products (while brands do list their ingredients, they don’t reveal full recipes for obvious reasons). “When we put the industry under the microscope, I felt that people would be putting minimal quantity ingredients into products just to have labeling terms, for example.”
Cole points to the fact Athletic Greens has built its business to a $150 million run rate, only raising equity funding after 11 years in business, as proof of the product’s sticking power with customers. She says the brand’s repeat purchase rate — which she could not disclose — was one of the things that inspired her to join the company (Cole's appointment was announced in December). If it didn't work, they wouldn't hang around. “We've seen so many brands with beautiful branding, lots of hype, lots of venture capital, able to go acquire customers,” she says. “But there was no organic repeat. That was never the case with Athletic Greens and AG1.”
These products are growing in popularity — but still, it’s nowhere near the $1.77 trillion that Americans spent on food in 2019. Today, the main challenge for meal replacement brands is not so much about proving product market fit than it is about figuring out how to get customers beyond those core fans on board.
Broadly speaking, Kencko considers any of the 88% of Americans that don’t eat enough fruits and vegetables to be a potential customer — as of 2021, Froes says the brand has sold products to less than 0.5% of the U.S.’s population. “We’re a young startup, and we only have growth ahead of us,” he says. “The way that we think about our roadmap is that it’s less about how we can make more powders, but more how can we reimagine the form factor of fruits and vegetables?”
This month, Kencko launched a range of “bowls” — dehydrated meals that can be prepared in 10 minutes, just by adding hot water. The convenience factor is still there, although the products are far more recognizable as food than the powdered smoothie sachets. It’s a move that follows in the footsteps of Huel and Soylent, who have added dehydrated meals, bars and ready to drink formats to their ranges in a bid to appeal to more people.
Athletic Greens, which has built a name for itself selling just its AG1 powder, is using the funds it has just raised to ramp business up a few gears, with new product launches, international pushes and continued research and development all on the cards for the next 24 months, according to Cole.
“The funding is going to drive that. It’s all about scale, future and — yes — marketing,” she says, in a nod to Athletic Green’s recent social media blitz.